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Covid and after: the battle for fiscal space in LAC

The battle for fiscal space in LAC
There are various definitions of ‘fiscal space’, all broadly based on the idea of having some kind of financial reserve or money held ‘in the back pocket’ which would allow a government to deal with unexpected spending needs...
The Covid-19 pandemic was a major shock to the LAC economies...
LAC has plentiful experience of what can be called vicious fiscal cycles...
So far, the discussion has made little mention of politics, a critical omission...
Some recent examples may cast further light on the type of political tensions involved...
Colombia’s right-wing government also got itself into political difficulties over fiscal adjustment...
April-September, which was subsequently halved until the end of the year...
Not surprisingly, perhaps, the crippling impact of the Covid-19 pandemic has led many to question traditional approaches to fiscal management...
This paper has argued that in the post-pandemic era LAC countries will in principle be able to recover and rebuild lost fiscal space so that they will eventually reduce the public debt burden and get themselves back on a pathway of sustainable economic growth...

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